Q: DMS is theworldwide leader in fund
governance; how has the company become so successful in this
DMS is at its core entrepreneurial and has pursued opportunities
for innovation as well as direct business development for the last
15 years. DMS directors came through the 2008 financial crisis with
a strong reputation for integrity and competence. Throughout this
expansion from a small team to well over two hundred staff, a
professional financial services firm ethos has been very actively
cultivated. As such, DMS is the most process driven Fund Governance
firm in the world. Observable, measurable and verifiable steps in
the Fund Governance process, which are carefully documented in our
database, are the basis for our Fund Governance Transparency Report
("FGTR"). The FGTR is a natural product of the right
people doing the right work, but is only possible when we use the
best systems and contemporaneously document a director's
decision making process. We are now asked for these reports by
auditors and investors and they are used as a basis for discussions
with regulators and tax authorities regarding the substance of the
independent director function and can be dispositive, especially
with respect to tax domicile issues for investment vehicles.
Q: The companyoffers comprehensive
Fund Governance, International Tax Compliance, AIFMD, Banking +
Custody, Trust, Corporate, Outsourcing and Structured Finance
solutions that support investments across a range of structures,
and diverse investment strategies. Can you give me an example of
some of these solutions?
We have recently advised clients on typical vehicles used in
Luxembourg for private equity vs. more liquid funds and walked
through in detail the options using our AIFM for such a stand-alone
fund or a sub-fund on our fully hosted platform using top tier
service providers with the formation documents, templates, service
providers etc. already in place as well as previously approved
service providers such as the administrator, depository, legal
counsel, auditor, directors, registered office, MLRO and company
secretary. Such a platform can be appealing as the approval process
will be much shorter and time to market is critical in the
alternatives space. In this process we are quite agnostic as we can
support fund formation and operation in various jurisdictions, so
we strive to understand the goals of stakeholders and present a
suite of appropriate solutions.
Q: How complex are the regulatory frameworks which
surround fund governance?
The direct and indirect regulatory issues have grown much more
complex in just the last few years. The CIMA Statement of Guidance
for Funds has codified many best practices, but as a consequence
has articulated the expectations of the Cayman Islands regulator.
The Directors Registration and Licensing Law subjects directors of
regulated hedge funds to a fitness and probity test which includes
disqualification provisions. Initiatives such as FATCA (and now the
OECD Common Reporting Standards) and AIFMD mean that the board of a
fund must be very aware of the basic issues in these areas. Failure
to comply with FATCA (e.g. by having an IRS GIIN registration
number) could lead to severe issues with counterparties. Improper
marketing into the EU followed by losses suffered by the EU
investors would very likely result in compensation claims against
the fund and oversight failures regarding AIFMD compliance could
lead to personal liability for the directors.
Q: DMSsuccessfully operates more fund
directorships than anyone else in the world, how does it manage to
keep on top of ever-changing regulation in order to maintain this
successful fund directorship management?
DMS certainly draws on our industry colleagues at legal and
accounting firms to manage these challenges, but a key
differentiator in the Fund Governance space has been our
willingness to build capacity in key areas. We were a pioneer in
FATCA and International Tax Compliance and our proprietary AIFMD
solution is being used by large international banking groups. A
practical and practitioner mindset, rather than an academic one, is
then leveraged through our global firm. As a result we've been
recognized as a top offshore advisory firm on regulatory
Q: Is there anything else you would like to
An independent director is most valuable when issues are complex
and/or contentious. Is your director skilled, knowledgeable and
seasoned? Professional directors can, and should, be more than
window dressing. As an investor or manager, you should be
comfortable that this is indeed the case.
On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
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